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The quantitative aspirations of economists and financial analysts have formany years been based on the belief that it should be possible to build modelsof economic systems - and financial markets in particular - that are aspredictive as those in physics. While this perspective has led to a number ofimportant breakthroughs in economics, "physics envy" has also created a falsesense of mathematical precision in some cases. We speculate on the origins ofphysics envy, and then describe an alternate perspective of economic behaviorbased on a new taxonomy of uncertainty. We illustrate the relevance of thistaxonomy with two concrete examples: the classical harmonic oscillator withsome new twists that make physics look more like economics, and a quantitativeequity market-neutral strategy. We conclude by offering a new interpretation oftail events, proposing an "uncertainty checklist" with which our taxonomy canbe implemented, and considering the role that quants played in the currentfinancial crisis.

WARNING: Physics Envy May Be Hazardous To Your Wealth!